Reality wins the day in court ruling

In the
Metcash
decision, the courts ruled that commercial reality – the dominance of Woolworths and Coles – had to be considered, as did the chance of a rival emerging to buy the Franklins stores.

The courts accepted Metcash’s argument that it competed against Coles and Woolworths in the $70 billion retail grocery ­market, saying the ACCC’s claim it competed in the wholesale market had “no foundation in logic or reality".

As a result, the courts found the acquisition would be likely to strengthen the ability of independent retailers to compete more vigorously against the major chains.

Metcash was also willing to pay $215 million for a business that had racked up accumulated losses of $105 million over 10 years, a business for which there were few other buyers. A key part of the ACCC case was that there were other likely purchasers of the stores, or a significant proportion of the stores. But this argument was withdrawn at the end of the trial.